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Belgium

Why Belgium?

A federal state, Belgium is divided into three regions: Dutch speaking Flanders in the north, francophone Wallonia in the south and Brussels, the bilingual capital, where French and Dutch share official status. Based on the international trade Belgium’s economy is well developed and more than 70% of Belgium’s GNP comes from imports and exports. Belgium is a primary exporter of metals, diamonds, glass, medicine, textiles, and chocolate. Tourism is also a major income earning industry in Belgium. The country is one of the founders of North Atlantic Treaty Organization (NATO) and is considered as the ‘center of Europe’ thanks to its geographic location between two major countries such as: France and Germany. It is well connected internally and externally, through its excellent system of railways, roadways and harbours.

Advantages

The country is an ideal place for financial specialists to consider working together. Brussels is the capital city of the country is particularly multilingual. Belgium offers the following key benefits of doing business:

A strategic location

Being a member of the European Union, Belgium provides access over 500 million European Union consumers. Moreover, trading across the country borders is fast which takes only one hour to complete the compliance requirements for export. This is the most important reason why Belgium has become most favorable destination for foreign investment and ranked number one out of 190 economies in the category of trading in the World Bank’s Doing Business report.

Diversified economy

The country is committed to strengthening and expanding free trade agreements to ease access through international market and further accelerate economic growth. Belgium is the 12th largest exporter and the 14th largest importer of goods worldwide. The service industry makes up nearly 75% of the GDP and employs 73% of the workforce. With large focus on research, startups and medical trials, now the region is a hotspot for a growing biotech industry.

Strong infrastructure

The country is known for its highly developed transportation networks, including seaports, inland ports, airports, railways and more. This infrastructure has helped the economy thrive. It’s cross rail and air network is renowned in terms of serving business transport.

Brussels, a global city

As the seat of the EU, Brussels is known as the “capital of Europe,” and its significance as a centre of international governance and business makes Brussels is hub for European and international governance. NATO and the European Union are among the prominent institutions headquartered in Brussels.

Tax benefits

In Belgium, the organization permits corporate investors to localize benefits, absolved from profit retaining charge; given the corporate investor is an occupant in one of Belgium’s 80 twofold tax assessment settlement accomplices. Belgium is an ideal place for investors searching for habitation and citizenship in the European Union.

Industrialized investment

Without any doubt Belgium is a cutting edge industrialized society that relies vigorously upon unfamiliar exchange, particularly with its European neighbours. Its amazing transportation framework gives progressive systems connecting it to the modern habitats of Europe.

Simple Tax Regime

Individual taxes

In Belgium, residents are taxed on their worldwide income, irrespective of their nationality, while non residents are taxed only on Belgian sourced income. Basically, the personal income tax is calculated by determining the tax base and assessing the tax due on that base. Following tax rate are applicable on personal income in Belgium:

  • Income from 0 to 13,540 EUR is liable to tax at rate of 25%;
  • Income from 13,540 to 23,900 EUR  is liable to tax at rate of 40%;
  • Income from 23,900 to 41,360 EUR is liable to tax at rate of 45%;
  • Income over 41,360 EUR is liable to tax at rate of 50%.

Local income taxes

  • In Belgium, the communal tax levied on residents vary from 0% to 9% of the income tax due, however the average rate being 7%.
  • Whereas, on non residents, a flat surcharge of 7% is due. However, the communal taxes may also be levied on exempted foreign source income.

Corporate income taxes (CIT)

In Belgium, the corporate income tax is determined on accrual basis and consists of worldwide income less allowed deductions. The rules are equally applicable to all companies and permanent establishments (PEs) in Belgium. It is assumed that all income received by a company is, in principle business income.

Taxable income of non residents

In Belgium, non resident companies are liable to pay tax on Belgian sourced income, while the standard corporate tax rate is 25%. However, small companies meeting stringent conditions are sometimes eligible for a reduction of 20% rate on up to EUR 100000 in taxable revenue.

Local income taxes

No regional or local tax is levied on income. However, the immovable assets such as; land, building, possibly machinery and equipment’s situated within the territory of Belgium, in principle is subject to an immovable withholding tax that is levied locally.

Belgium Companies

With reforms introduced through Belgian Economic Law Code, the distinction between civil companies and commercial companies has been abolished. Following types of business establishments are available in Belgium:

Partnership

In Belgium, a company through partnership is the only company type without legal personality. However, it may acquire legal personality and become a general partnership or a limited partnership, depending on whether all or only certain partners will be jointly and severally liable for the partnership’s debts and liabilities.

Limited liability company

LLC can be described as the successor of the private limited liability company. In this type of company, the shareholders liabilities are limited to the value of their share capital in which they subscribed. LLC can be totally owned by foreigners making it the most popular Belgium Company to form by foreigners.

Cooperative company

Because of flexibility in the Belgian Companies Code, the cooperative company has often chosen in Belgium, which offers entry and withdrawal of shareholders. The cooperative company has shareholders who vary in number and whose contributions are variable. It is characterized by its very flexible format.

Public limited liability company

In a public limited company at least two shareholders are willing to invest capital. The public limited company is mainly favoured by large enterprises in Belgium, although it is also popular with SMEs.

Sole proprietorship

Sole proprietorship is simplest business form in Belgium and also the one in which the founder is fully liable with all of his assets. However, it can be successfully used by consultants and other individuals engaging in liberal trades but should be well aware of the unlimited liability.

Branches and subsidiaries

This type of companies is a good choice for foreign companies who want to establish their presence in the Belgian market. The main difference between these two is that, the branch is the one for which the parent company bears liability while the subsidiary is an independent company from the foreign one, although the foreign company can still control the subsidiary through shareholdings.

The country is one of the founders of North Atlantic Treaty Organization (NATO). Belgium is considered as the ‘center of Europe’ thanks to its geographic location between two major countries such as: France and Germany. Belgium is on the rise as a very important prospect for establishing business relations.

Author: Chandrawat & Partners

Date: April 2022

Topic: Doing Business in Belgium

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